Judge orders meeting for Pontiac retirees to prepare for loss of health care

Pontiac retirees hoping to have the loss of their health care benefits stopped in court Wednesday didn't get what they came for, but they got something.

Oakland County Circuit Judge Phyllis McMillen ordered an informational meeting at 11 a.m. Thursday at City Hall for retirees, who are to lose their health care benefits as they're currently provided for two years beginning Sept. 1.

"It's apparent to me by the response from the audience today" that retirees might not completely understand the position they're in, McMillen said, referring to the four dozen people who packed her courtroom on Wednesday morning. "They need to act and they need to act immediately, and they can't do it without information."

The City of Pontiac Retired Employees Association asked McMillen for a temporary restraining order in their lawsuit against the city and former Emergency Manager Lou Schimmel.

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Alec Gibbs, the group's attorney, said the elimination of Pontiac retirees' health care was decided without giving those affected an opportunity to respond or adequate time to prepare.

"We're dealing with pretty significant Constitutional violations" by the city, Gibbs said. "What we are seeking is a breathing space period (of time)."

Stephen Hitchcock, the city's attorney, said: "We didn't just leave retirees hanging to go out and find some coverage," explaining that the city is maintaining a group Blue Cross Blue Shield insurance pool.

Deductibles range from $500 to $3,000 and premiums range from $433.47 to $1,927.70 a month among the different choices in the group plan.

"They want you to come in at the 11th hour and roll back something ... that I'm told by Blue Cross couldn't be done by Monday, anyway," Hitchcock said.

Gibbs argued that Schimmel's plan to provide a $400 monthly pension benefit increase to retirees, helping to offset the cost of health insurance, is a diversion of pension assets to pay for a city obligation, and therefore illegal.

McMillen said: "I just question whether you have the backing of your membership to have a ruling made that (the pension increase) is outside the ability of the emergency manager -- to give them at least something."

During an exchange when Gibbs said cuts to retiree health care represent breaches of contract, McMillen said Schimmel had the right to terminate contracts per the state's emergency manager law.

"I'm not making a judgment on the emergency manager act, whether it's a good thing or bad thing for Pontiac or any other city," she said. "It's an agreement. It's a contract. He's got the right to terminate it." .

McMillen didn't rule on the motion for a temporary restraining order. Instead, she instructed the association's attorney to produce a breakdown of the group's membership, to be done by 5 p.m. Wednesday, as well as a statement of contract rights and the group's standing to represent retirees. She also asked how the relief requested by the group is supported by its court pleadings.

The hours-long hearing saw pointed questioning of Gibbs by McMillen.

"It's an entirely different lawsuit than what you originally pled," she said, referring to an action that originally began before Oakland County Circuit Judge Rae Lee Chabot as a successful challenge to Schimmel's reorganization of a city pension board and later unsuccessfully targeted the city's payoff of bonds owed on the Phoenix Center.

Gibbs said to McMillen of the litigation: "We've been attempting to keep it in one form."

Later, the judge said "there are clearly some major problems in this case, and they are procedural problems."

The benefits cut -- including medical, dental and life insurance -- was approved by the state Emergency Loan Board in July for a period of two years in lieu of a counter-proposal by the Pontiac City Council that pitched a complicated transfer from the Pontiac General Employees Retirement System to pay for health care benefits.

Retiree health care costs the city $6 million annually, and its set-aside is a major piece of the two-year budget Schimmel left behind when he resigned on Aug. 19.

"There's been amazing and heroic legal wrangling and maneuvering on this," McMillen said to Gibbs, who has several pending lawsuits against the city that challenge benefit cutbacks. "But that doesn't mean there's been a violation."